July 7, 2010

Milk from Victoria to be delivered to North of Australia

Parmalat yesterday (July 6) confirmed it would deliver milk from Rockhampton in central Queensland to fill part of its 11 million litre private label Woolworths contract.

But Tableland farmers say Parmalat's 30 farmers in central Queensland cannot fill the contract and milk would have to be trucked nearly 2800km from Victoria and 2500km from New South Wales to make up the shortfall.

Ravenshoe dairy farmer Lyn O'Connor said yesterday (July 6) if Parmalat could fill the 11 million litre contract from Central Queensland it would be a big miracle.

She backed National Foods decision not to sell milk under the cost of production and said Parmalat was happy to make a loss on this part of the deal because there were tradeoffs.

"It's not just about the milk for Parmalat," she said. "They are happy to cut a loss for other benefits in the Woolworths contract. They would be getting shelf space they would normally have to pay for."

Parmalat chief executive officer Craig Garvin said the company remained committed to ensuring the long term sustainability of the state's milk industry, including in North Queensland.

"The milk industry is important to the North Queensland region, and this is why we instigated negotiations with National Foods to explore options to continue supply to the Woolworths stores from the Malanda site," Garvin said. "Despite the outcome of these discussions, Parmalat remains open to exploring alternative methods for enhancing supply arrangements for Far North Queensland dairy farmers."

National Foods said talks had failed because Parmalat wanted Tableland milk at a price under the cost of production and the company was not prepared to give it away. The decision is supported by farmers.

Tableland farmers will continue to supply Woolworths' Private Label until the end of August and Parmalat will fill the contract from September 1.